RBI draft proposes NBFCs offer only term loans, no revolving credit — credit-card NBFCs excepted; comment window closed on 28 August 2026
RBI released draft amendment directions on 6 August 2026 proposing that an NBFC offer only credit products in the nature of term loans and no revolving credit products, except an NBFC authorised by RBI to issue credit cards. The draft defines “term loan” and “revolving credit” and proposes to delete the demand/call loan provisions. Comments were invited by 28 August 2026; that window has closed.
Key facts
- In force
- Draft only — not in force; comments closed 28 August 2026
- Who it affects
- NBFCs offering credit lines and other revolving facilities, fintech lending partners of NBFCs, NBFC borrowers
- What it is
- Comments invited
- Section
- FEMA & RBI
- Published
- 6 August 2026
In 30 seconds
- The draft is the Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Amendment Directions, 2026, released on 6 August 2026.
- Proposed new paragraph 108A: an NBFC shall only offer credit products in the nature of term loans and shall not offer any revolving credit products.
- The restriction would not apply to an NBFC authorised by the Reserve Bank to issue credit cards.
- “Revolving credit” is proposed to mean any fund based credit facility that does not meet the definition of a term loan.
- A term loan must have a fixed principal, a predetermined repayment schedule and a limit that cannot be restored on repayment.
- Comments were invited by 28 August 2026 — the window has closed. This is a proposal, not a final direction.
हिंदी में सार
RBI ने 6 अगस्त 2026 को एक ड्राफ़्ट जारी किया जिसमें प्रस्ताव है कि NBFC सिर्फ़ term loan दें और कोई revolving credit प्रोडक्ट न दें — क्रेडिट कार्ड जारी करने के लिए अधिकृत NBFC को छोड़कर। ड्राफ़्ट में term loan और revolving credit की परिभाषा है और demand/call loan वाला हिस्सा हटाने का प्रस्ताव है। यह अभी सिर्फ़ प्रस्ताव है, लागू नहीं; सुझाव भेजने की आख़िरी तारीख़ 28 अगस्त 2026 निकल चुकी है।
What RBI has proposed
On 6 August 2026 the Reserve Bank of India released the draft Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Amendment Directions, 2026 for comments. The draft would amend the Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025 dated 28 November 2025.
This is a draft. Nothing in it is in force, and the final directions may differ.
The central proposal
The draft proposes a new Part F, “Restrictions on revolving credit facilities”, in Chapter VIII (Other Regulatory Restrictions), with a new paragraph 108A:
- An NBFC shall only offer credit products which are in the nature of term loans, and shall not offer any revolving credit products.
- This restriction shall not apply to an NBFC authorised by the Reserve Bank to issue credit cards.
The two proposed definitions
| Term | Proposed meaning |
|---|---|
| Term loan | A fund based credit facility of a fixed principal amount made available by an NBFC to a borrower, with all of these features: (a) the sanctioned limit is disbursed in one or more instalments and is repayable in accordance with a predetermined amortization schedule, either as periodic instalments or as a bullet on the stated due date(s); (b) once disbursed, the sanctioned limit cannot be restored or replenished upon repayment of the whole or a part of the principal. |
| Revolving credit | Any fund based credit facility which does not meet the definition of a term loan. |
The definitions would be inserted in paragraph 4(1) as sub-paragraphs (xxv-a) and (xxv-b). Read together, a facility whose limit becomes available again as the borrower repays would not be a term loan under the draft — and so would be revolving credit.
What the draft would delete
- Paragraph 5(5) in Chapter II of the Directions.
- Part D, “Demand/ Call Loans”, in Chapter VIII.
The draft text does not reproduce the provisions it proposes to delete.
Commencement and transition
The draft says the amendments “shall come into force immediately”. It contains no transition clause and says nothing about revolving facilities already sanctioned. Whether the final directions deal with existing facilities is not known from this document.
Comment window
RBI invited comments from regulated entities and other stakeholders by 28 August 2026, through “Connect 2 Regulate” or by email. As on 4 October 2026 that window has closed.
What NBFCs should do
Nothing changes until RBI issues final directions. NBFCs that offer credit lines or other facilities where the limit is restored on repayment can map those products against the two proposed definitions, since the draft’s test is simple: a fund based facility that is not a term loan is revolving credit.
Questions and answers
Has RBI banned NBFCs from giving revolving credit?
No. RBI has only released a draft, on 6 August 2026, proposing that NBFCs offer only term loans and no revolving credit products. It is a proposal and is not in force.
Which NBFCs would be exempt under the draft?
The proposed restriction would not apply to an NBFC authorised by the Reserve Bank to issue credit cards.
How does the draft define a term loan?
A fund based credit facility of a fixed principal amount where the sanctioned limit is disbursed in one or more instalments, is repayable on a predetermined amortization schedule (periodic instalments or bullet), and cannot be restored or replenished on repayment.
Can comments still be sent?
RBI invited comments by 28 August 2026. That date has passed, so the comment window has closed.
What happens to existing revolving facilities?
The draft does not say. It has no transition provision and only states that the amendments shall come into force immediately.
Published 6 August 2026. Updated 7 October 2026. This report is for general information and is not professional advice. Read the source document before acting on it.